Amendments to the VAT Act – VAT on entertainment supplied on ships and aircraft
The general principle is that input tax may not be claimed on the goods and services acquired to the purpose of entertainment. Various exceptions apply to this general rule.
One of the exceptions to the basic rule is that where food and beverages (being entertainment as defined) are supplied to passengers or crew members in a business supplying taxable services of conveyance of passenger (i.e. by boat or air, or cross-border via any mode of transport), input tax incurred on the food and beverages qualifies as recoverable input tax.
This limitation on claiming input tax only on food and beverages has been lifted where other forms of entertainment (for example inflight movies) are supplied at no additional cost to the traveller.
Where a separate change is made, the normal VAT on entertainment rules apply.
Information courtesy of: LexisNexis South Africa
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